After no less than nine straight
trading days of losses, Cable, or the pound sterling against the US dollar,
rebounded yesterday, in robust fashion. There was no economic news on either
side of the Atlantic (the US
markets were on holiday for Labor Day), but the rise started about an hour
after the open of the London
trading session. Towards lunchtime London
time, the pound had gained by a full US cent, from $1.518 to $1.528 in value.
The fall that was corrected yesterday
had its origins in trading on the 25th of August, the same day that
the Chinese monetary authorities made another cut to their core interest rates,
in an attempt to contain the turmoil around the virtual collapse of their
equity markets. The FTSE rallied on that day and the pound started to lose
value.
Cable is also up in the Asian session
this morning (Tuesday) despite a negative reading for British Shop Price Index
for August (-1.0%). Though negative, this reading is still an improvement on
the previous month, which came in at -1.4%.
No
catalyst other than a technical support level
The only apparent catalyst for
yesterday’s rise is the existence of the support level that had been
established in GBPUSD at the very end of May and the first day of June.
The Bank of England will have its
monetary policy statement this week, on Wednesday. There is no expectation of a
rate rise announcement on this occasion, but there may be commentary in the
statement itself that will give some clue as to the possible timing of a Bank
of England tightening regime.
Some market participants would appear
to think so.
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